Economic Freedom of the World 2010 Annual Report

This year’s report notes that economic freedom suffered its first setback in decades. The average economic freedom score rose from 5.55 (out of 10) in 1980 to 6.70 in 2007, but fell back to 6.67 in 2008, the most recent year for which data are available. Of the 123 countries with chain-linked ratings in 2007 and 2008, 88 exhibited rating decreases and only 35 recorded rating increases. In this year’s index, Hong Kong retains the highest rating for economic freedom, 9.05 out of 10, followed by Singapore, New Zealand, Switzerland, Chile, the United States, Canada, Australia, Mauritius, and the United Kingdom.

This year’s report also contains new research showing the impact of economic freedom on unemployment rates and homicides. According to Horst Feldmann, more economic freedom appears to reduce joblessness, and the magnitude of the effect seems to be substantial, especially among young people. Edward Peter Stringham and John Levendis examine the effect of economic freedom on rates of homicide in Venezuela, Colombia, South Africa, Latvia, and Lithuania. The results suggest that increases in economic freedom lead to decreases in homicides.

The first Economic Freedom of the World Report, published in 1996, was the result of a decade of research by a team which included several Nobel Laureates and over 60 other leading scholars in a broad range of fields, from economics to political science, and from law to philosophy. This is the 14th edition of Economic Freedom of the World and this year’s publication ranks 141 nations for 2008, the most recent year for which data are available.

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“The conclusion [of the economic freedom project] is abundantly clear: the freer the economy, the higher the growth and the richer the people. Countries that have maintained a fairly free economy for many years did especially well.”
—The Economist

“Economic freedom advances economic growth, reduces poverty and promotes other civil and political freedoms. It is also a tonic against terrorism because of the opportunities it creates. All the nations behind global terrorism lack economic freedom.”
—Nobel Laureate Milton Friedman

James Gwartney holds the Gus A. Stavros Eminent Scholar Chair at Florida State University, where he directs the Stavros Center for the Advancement of Free Enterprise and Economic Education. He is a coauthor of Economics: Private and Public Choice (Cengage/South-Western Press), a widely used text on the principles of economics that is now in its twelfth edition. He is also a coauthor of an economics primer, Common Sense Economics: What Everyone Should Know about Wealth and Prosperity (St. Martin’s Press, 2005). His publications have appeared in both professional journals and popular media such as the Wall Street Journal and the New York Times. He served as Chief Economist of the Joint Economic Committee of the US Congress during 1999/2000. He was invited by the incoming Putin Administration in March 2000 to make presentations and have discussions with leading Russian economists concerning the future of the Russian economy. In 2004, he was the recipient of the Adam Smith Award of the Association of Private Enterprise Education for his contribution to the advancement of free-market ideals. He is the current President of the Southern Economic Association. His Ph.D. in economics is from the University of Washington.

Robert A. Lawson holds the Jerome M. Fullinwider Endowed Centennial Chair in Economic Freedom and is director of the O’Neil Center for Global Markets and Freedom at the Southern Methodist University (SMU) Cox School of Business. Prior to SMU, he taught at Auburn University, Capital University, and Shawnee State University. Professor Lawson has numerous professional publications in journals such as Public Choice, Cato Journal, Kyklos, Journal of Labor Research, Journal of Institutional and Theoretical Economics, and European Journal of Political Economy. He has served as president of the Association of Private Enterprise Education and is a member of the Mont Pelerin Society.

Joshua Hall is the Director of the Center for Free Enterprise and an Associate Professor of Economics at West Virginia University. Prior this position, he was the Elbert H. Neese, Jr. Professor of Economics at Beloit College and an economist for the Joint Economic Committee of the US Congress. Dr. Hall has published in numerous policy studies and professional publications, his research having appeared in journals such as the Atlantic Economic Journal, Cato Journal, Journal of Economic Education, and Journal of Labor Research.